Mortgage Loan Originator Prep 4

Question 1

A borrower receives a Loan Estimate on Monday. By when must they receive the Closing Disclosure before closing?

Accepted Answer

Three business days before consummation

Answer

Under TRID, lenders must provide the Closing Disclosure at least three business days before loan consummation.

Question 2

Which of the following is NOT a permissible basis for denying a mortgage application under ECOA?

Accepted Answer

Applicant's national origin

Answer

ECOA prohibits credit discrimination based on national origin, race, color, religion, sex, marital status, age, or receipt of public assistance.

Question 3

What does the term 'points' refer to in mortgage lending?

Accepted Answer

Prepaid interest paid at closing to reduce the interest rate

Answer

One point equals 1% of the loan amount paid at closing, typically to buy down the interest rate (discount points) or as origination fees.

Question 4

An MLO receives a referral fee from a title company for steering clients their way. Under RESPA, this is:

Accepted Answer

Illegal — RESPA prohibits kickbacks for referrals of settlement services

Answer

RESPA Section 8 strictly prohibits kickbacks or unearned fees between settlement service providers for referring business.

Question 5

What is the primary difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?

Accepted Answer

Fixed-rate has a constant interest rate; ARM's rate changes periodically based on an index

Answer

A fixed-rate mortgage maintains the same interest rate for the life of the loan, while an ARM's rate adjusts periodically based on a market index plus a margin.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Prep 4